Your clients can open savings account in an overseas bank and trading account with Indian broker; and invest in international mutual funds and residential properties to take international exposure.
An individual can remit U.S. $250,000 per financial year (April-March) for investing abroad under the Liberalized Remittance Scheme. Under this scheme, individuals remit money across the border, without seeking specific approvals. However, before investing in such assets, investors should be aware of the laws pertaining to capital gains tax, foreign currency and other taxes.
Here are a few investing opportunities that you can recommend to your wealthy clients
Foreign bank account:
Most foreign banks open an account if the individual is physically present at the branch. There is no need to furnish local documents.
Advisors say that having a foreign bank account can help people reduce currency risk. “Parents who plan to send their kids abroad for further studies can start saving in dollars in a foreign account. This will help them deal with currency risk,” says Kavitha Menon of Probitus Wealth.
Trading account:
Your client can also invest in companies such as Facebook and Google by opening a trading account with any Indian broking firm having tie up with foreign broking partner. However, your clients cannot execute transaction in derivative markets.
International mutual funds:
International mutual funds is an easy way of adding international exposure to your client’s portfolio. These schemes invest in stocks, commodities listed abroad. Gajendra Kothari of Etica Wealth Management says, “Many investors are comfortable investing in international funds as large organisations such as Invesco and BlackRock manage such money. Also, these companies have presence in India,” says Gajendra.
Residential properties:
Another way to add international exposure is by investing in residential properties.
It is beneficial for individuals who often travel to these countries, business interests or have kids who are studying abroad.
Experts say that the current limit of around US$2.50 lakh is sufficient to buy a studio apartment or a small apartment in many countries. This limit is applicable for an individual; hence, in a family of four, such a limit can go up to US$10 lakh.
Amit Maheswari of Ashok Maheshwary & Associates says that individuals should keep in mind is the legality of the titles of properties. “Your clients should be aware of local laws and check all the paperwork when purchasing property abroad,” he cautions.
He further advises that investors can buy property in countries where tax laws are favourable such as UK. “Recently, the depreciation of pound has also provided good investment opportunities to investors to invest in real estate in London,” says Amit.
However, Gajendra says that individuals should only invest in residential properties if they plan to live in the country. “The maintenance cost along with managing laws and taxation will be difficult for individuals residing in India. In my view, financial assets prevails over physical assets in terms of cost, taxation and accessibility,” says Gajendra.
